UK government launches HS2 review as costs soar

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UK Transport Secretary Louise Haigh acknowledged the costs of building high-speed Line 2 are still soaring as she announced plans to bring the project back under control with a new independent review.

The headline price tag for building a new rail line from London to Birmingham continues to rise despite the scope of the controversial project being halved last year to contain costs. Former Tory chancellor Rishi Sunak downsized the entire northern region from Birmingham to Manchester.

It has long been clear that the costs of HS2 were spiraling out of control, but since becoming transport secretary I have seen up close the scale of the failure to deliver the project and it is appalling, Haigh said. I have announced urgent action to understand the cost of HS2 and ensure taxpayers' money is put to good use.

While the Department for Transport estimates the remaining project costs at $45 billion to $54 billion at 2019 prices, HS2 executives have proposed a higher figure of $49 billion to $57 billion.

In January, HS2 chairman Jon Thompson told MPs that figure would be between $10 billion and $67 billion higher after taking inflation into account.

The project's new CEO, Mark Wild, previously head of the Elizabeth Line, is expected to give a much higher estimate when he takes stock of the project. That number is expected to rise again due to inflation, changes to previous plans and delays in some projects.

Haigh confirmed he had asked infrastructure industry veteran James Stewart to chair the new Major Transport Project Governance and Assurance Review. Stewart is the former global infrastructure chair at advisory firm KPMG.

The review, revealed by the Financial Times last month, will examine the oversight of major transport schemes, including HS2. The government will focus on measures to provide cost-effectiveness, as well as efficiency in forecasting and reporting on costs, schedules and benefits, the government said on Sunday.

The review will strengthen ministerial control over HS2. The government will resume ministerial oversight of the project to ensure greater accountability, the Transport Department said.

Initially, there will be a need for more regular meetings between ministers and HS2 executives. But in the longer term, the Stuart review will look at whether DfT's sponsorship and oversight model needs a wider overhaul to improve delivery.

Haigh said: Now is the time to learn the lessons and ensure that the mistakes of HS2 are never repeated.

HS2 is expected to begin operating trains between Birmingham and Old Oak Common, a west London station, between 2029 and 2033, much later than originally planned.

Haigh is expected to confirm this month that the service will continue for an additional 4.5 miles to Euston, north London. Radio station LBC reported last week that the government wants to revive at least the northern leg of HS2 from Birmingham to Crewe.

But government officials said plans to conduct an initial feasibility study for new routes in the region were more limited and would not result in higher speeds.

The DFT said on Sunday the government had made clear it would not revive phase two of HS2. The Government recognizes concerns about connectivity between Birmingham and Manchester, but the main focus is now on delivering HS2 safely between Birmingham and London at the lowest reasonable cost.

HS2 said it recognized there was a lot to learn from deliveries to date and was actively implementing controllable changes to stabilize costs under new leadership.

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